02/07/2007, 11:05am, EST
Wednesday, February 7th
Analyst: DRM-free music beneficial, but unlikely
The likelihood of the big four music labels licensing their music catalogs to online stores such as Apple's iTunes store without digital rights management (DRM) protection as requested by Apple CEO Steve Jobs in an open letter yesterday is less than 25 percent, according to Piper Jaffray senior analyst Gene Munster. While such a change is unlikely, the analyst believes Apple would benefit due to increased iPod sales -- given that the iPod dominates the digital media player market. "If this unlikely scenario played out and music labels agreed to sell music DRM free online, we believe it would be positive for Apple and its market-leading iPod+iTunes ecosystem," Munster wrote in a research note obtained by MacNN. Piper Jaffray maintains its 'outperform' rating on Apple shares with a $124 price target.
"Consumers choose a device first and a music service second. Apple is confident, justifiably given the iPod's leading market share (70 percent share), that increasing usage of online music services based on an open platform will sell more devices and most of those devices will be iPods."
The research firm speculates that even if consumers chose a service other than the iTunes store to download music, the changes would prove inconsequential to Apple if iPod sales also increased.
"iPods are significantly more profitable to Apple than iTunes; iPod (35 percent of sales) gross margins are in the 30 percent range while iTunes (5 percent of sales) gross margins are in the 5-10 percent range."
Filed under: Investor
,
, 8
,
,
,
,
,

subscribe to comments
for this article
Listen to us RIAA - we WANT to buy music. Make it more appealing for us to do so!
If you really don't want your songs in AAC format, they don't have to be. All you need is iTunes, 10¢ for a blank CD-R, and an exta 1-10 minutes after the song has downloaded. Just burn your songs to the disk (as you should be doing anyway to back up your purchase) and re-import them in iTunes from the disc as another format. It can be mp3, AIFF, MPEG, Apple Lossless, AAC or whatever. If you bought a whole Album, then the names and info are found in the online database with no hassel to you. If not, you may have to spend 5 minutes or so copying and pasting the track name, artist name, album name, etc.
If you want to use a different player, then it probably comes with its own app and all you have to do is have that App reference your iTunes library or simply move your music from the iTunes library to that application's library.
The only reason for people whining here is laziness. You would spend just as much time importing from a CD you buy as from importing songs from a disc burnt from iTunes.
There isn't now nor has there ever been a real lock on music you buy from iTMS. I'm certain Apple would post these instructions if they didn't have to try and appease the Labels with their effort of DRM. Of course, this purported issue wouldn't exist if the labels didn't RERQUIRE drm. As much attention as the possibility is getting, I suspect it will still be a while before we see any change. The Labels won't give up their one current "control: at stopping piracy, as ineffective as it is.
I did test and compare with a couple of songs before going through with this, so don't presume that people who do so lack understanding of compression issues. I think it quite obvious that you don't buy much music from the iTMS from your comment, so why not verify before just going by the numbes and insulting others' intelligence.
Thanks.
The whole point of digital music is supposed to be convenience, but DRM takes that away.
I'm very happy with the sound quality of this method but it's apples to oranges I guess. I have noticed a degradation of sound from the itunes to cd to itunes method that I don't hear with WireTap Pro. You can use other audio utilities that are free that will also record your macs internal sounds. I hope this helps.. Cheers.
Is it easy for you and I? Yes. Is the average person too lazy to bother to learn something that is really relatively simple? Yes. Just imagine describing the process to your mother or father. Their eyes would glaze over around step 2.
There are probably plenty of folks just as intelligent and computer-savvy as you and I, who wouldn't bother to do a tune-up on their own car even though most of it is relatively simple. It's all a matter of what you are familiar and comfortable with... so don't be so smug about those 'lazy' people out there who can't be bothered to bypass DRM by burning and re-ripping.